One Guy's Investments: 12/25/2005

I haven't written much about CV Therapeutics (CVTX -- free RT quote), largely because I bought it on a newsletter recommendation and haven't become much of an expert on the science of this biotech company. The argument for CVTX that I found compelling was that they had a truly new treatment for chronic angina, an ailment that affects millions and that is currently treated with a cocktail of generic drugs that don't always work well for everyone. Their lead drug in that area, Ranexa, has completed phase III trials now and seems very likely to be approved -- and if current treatments continue to be lacking for many patients, they will find a good market, with possibilities for expanding into a blockbuster market in the future. I wrote a couple months ago that bad news for Beta Blockers might be good news for Ranexa, but that's just a wild guess. At the same time, CV's sales force has been built up over the last half of this year as they gear up to sell Aceon, which they licensed in from Solvay Pharmaceuticals, in the hypertension market. With several other late-stage compounds in development that seem to show real promise for other cardiovascular diseases, CVTX seems like a solid bet to have several important products on the market within the next few years. I expect there will be news probably early this year on approval for an expanded label for Ranexa, and approval for the new cardiac imaging agent Regadenoson, and their three other compounds in the clinic may supply some fodder for the news mill as well. If you're interested in more detail, Zacks recently published a long (pdf) analysis with their assessment of the potential of all the clinical compounds. I have a full position in CVTX that I acquired at an average cost of just about $21, so it has been a fine performer even if not as quick a mover as PDLI or VRTX ... but I expect good things over the next couple of years. I will hold on to see if Ranexa, in particular, can catch on quickly with cardiologists. I'll also try to monitor how Aceon is doing, because that will be the acid test for this new sales force before they bring their own compounds out of the clinic.

Labels: CVTX

Click Commerce (CKCM -- free RT quote) is one of the smaller companies in my portfolio at $230 million (even after acquiring dozens of small software companies), and is certainly one of the more volatile. I made my most recent purchase back in October around $13, and my previous one around $25 in the Spring, and my average cost is just over $16 a share. Click works in several areas that are growing rapidly, and even though they have lots of competition I very much like their diversified product offerings, their growth potential, their reasonable valuation, and their charismatic CEO, Michael Ferro, who owns about 25-30% of the company. RFID data management certainly appears to be their major growth engine for the near future, and they are doing a good job signing up Wal Mart suppliers and getting other major retailers like Home Depot to use their integration software. I'm convinced that RFID will be a significant area of investment for all companies in the supply chain, but even if it isn't CKCM has lots of other business software solutions on offer and hundreds of other quality clients -- they're surprisingly diverse in their targeted product offerings for such a small company, and I like that. Because I can't really be an expert in the offerings of all the companies in this space, I just follow the cycle of investment in software services and the speed of RFID rollout as indicators for Click's potential growth, and as far as I can see things look very solid. CKCM has been extraordinarily volatile and is very underfollowed on the Street, but if we see prices drop under $20 again soon I'll be very tempted to add more -- this tiny company has a lot of room to grow, and heavy insider ownership means that the acquisitive CEO is on our side.

Labels: CKCM